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Ysleta ISD advisers warn freestanding ERs, drug costs could push health plan toward a $5.6 million gap
Summary
Gallagher told the Ysleta ISD board its self-insured plan is being hit by rising provider contract rates and private-equity-owned freestanding emergency rooms, and offered two plan-design alternatives that staff say would narrow an estimated $5.6 million shortfall projected for 2027.
Gallagher benefit consultant Natalie Haskett told the Ysleta Independent School District board that national carrier contract renewals and new local providers are driving medical costs higher and beginning to affect the district's self-insured plan.
"We are seeing contracts renewing at an 8 to 12% increase," Haskett said, and she flagged private-equity-backed freestanding emergency rooms as a growing problem: those facilities often use dispute-resolution/arbitration processes that result in higher awards to the facility and larger employer costs. "We're seeing sometimes they're billing 3 to 500% more than the original claim," she said, and noted that in some book of business Gallagher sees multi-million-dollar monthly bills from freestanding ERs.
Why it matters: Ysleta ISD's plan performance through April 2026 shows medical cost trends materially higher than national averages and several large high-cost claims. Gallagher estimated the 2027 plan could cost about $38.7 million if no changes are made and said the district may face roughly a $5.6 million swing unless steps are taken.
What Gallagher proposed: Haskett offered two plan-design alternatives focused on deductibles, co-pays and coinsurance rather than immediate premium increases. Under one option the district would still face approximately a $566,000 shortfall; the alternate package produced a small surplus in Gallagher's projection. Specific changes included modest deductible increases (platinum plan +$250 individual, high-deductible plan +$400) and higher office and pharmacy co-pays for some tiers.
Trustee questions and staff context: Trustees pressed Gallagher on prior projections and on timing: the planned changes would take effect with the calendar year (January), so they do not reduce the current 2026 run rate. Trustees also sought clarity on whether the health fund currently shows a deficit; Gallagher and staff said projections vary depending on the run-in of prior-year claims, but that with four months of data the firm's projection is roughly $5.6M and district staff have estimated a related $6.2M figure when factoring likely runout and fund balance.
District responses and next steps: Board members asked staff to pursue a communication campaign to discourage use of freestanding ERs by employees and to send letters to facilities that target school employees. Gallagher said the district has begun outreach and education, and recommended continued plan-design changes if the board wishes to cap employer exposure.
Ending: Staff did not propose immediate premium increases for employees at the workshop; instead Gallagher and staff presented options that shift costs through deductibles and co-pays and recommended a monitoring period to refine projections as more 2026 data becomes available.
